Freezing weather gives region's economy dose of the winter blues

THE region's economy was hit by January's grim weather, new research says.

Yorkshire and Humber's output grew but gains in activity and new business were undermined by the conditions, which included heavy snow, black ice and days of sub-zero temperatures, according to the Yorkshire & Humber January PMI.

The study also said that cost pressures continued to intensify, with input prices rising at the sharpest rate for over a year. However, output charges were unchanged, pointing to further margin squeezes at companies.

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The Business Activity Index – which measures the combined output of the region's manufacturing and service sectors – fell back in January, posting a reading of 52.0, from 55.8 in December.

A similar slowdown of new business growth was also signalled by the latest survey data, Markit said.

The recession officially ended in the final three months of last year but figures from the Office for National Statistics showed a low growth in output of just 0.1 per cent. Pessimists fear the data, which is subject to revision, could show Britain's economy was flat between October and December.

A report of Markit's Yorkshire fundings said yesterday: "Anecdotal evidence indicated that rates of expansion were undermined to some extent by January's inclement weather, which led to transport disruption, delivery delays and cancelled bookings.

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"Of those companies that registered higher activity and sales at the start of 2010, there were reports of an improvement in underlying demand, which was supported by advertising and new product launches."

Job-shedding continues but at a slower rate – the slowest in 21 months of contraction.

"Leavers were generally not replaced as excess capacity persisted, while there were some reports of company restructuring.

"Slower growth of new business enabled firms to make inroads into their work outstanding at the start of the year. Backlogs have now fallen continuously for nearly two years.

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"Input cost pressures continued to intensify at the start of 2010, with the rate of inflation the strongest since September 2008.

"There were reports of higher raw material costs, and associated increases in supplier charges."

Patrick Bowes, chief economist at Yorkshire Forward, said: "Whilst it is disappointing that the rate of overall expansion in activity has moderated since January, this in part reflects the December stimulus to order books from VAT rising back 17.5 per cent.

"The three-month PMI at 54.4 is well above its level of a year ago."

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